Stock Quotes in this Article: IRM, PFE, T

BALTIMORE (Stockpickr) -- Timing is everything right now in the dividend world, as scores of companies work to pay out dividends before year-end, and others prepare to issue their distributions to shareholders as soon as we tick over into 2011.

But thanks to the extension of historically low dividend tax rates, the rush to cut checks to shareholders is somewhat less significant than it could have been. After all, income investors won’t be handing Uncle Sam as large of a haircut on dividend income as many expected. That move means that 2011 will continue to be an attractive environment for income investors, who seek out investments that return a chunk of their profits onto their shareholders.

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    Dividend stocks aren’t just attractive for their payouts, however; income stocks are historically a superior source of capital gains as well. Over the last 36 years, dividend stocks outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders, according to a study from NDR.

    Right now, companies that are willing to part with cash in arguably tough times are worth a second look. And while companies that pay dividends are great, the companies that increase those dividend payouts over time are even better.

    Each week, we take a look at companies that are actively increasing their dividend payouts to shareholders. Without further ado, here’s a look at this week’s dividend stocks.

    First up this week is Pfizer (PFE), the $139 billion pharmaceutical firm that announced an 11.1% dividend increase last week. The hike brings the company’s quarterly payout to 20 cents per share, an industry-leading 4.61% yield at current price levels.

    With a payout ratio of 95%, Pfizer is also one of the best pharmaceutical stocks out there when it comes to taking care of shareholder interests. The company is able to pay out the vast majority of its earnings each quarter because of the massive coffers that it’s built over the years. At present, Pfizer boasts cash and short-term investments of $23.24 billion, which means that around 17% of the company’s market value is liquid right now. And most of the company’s long-term debt is the result of the recent Wyeth acquisition, not a product of Pfizer’s day-to-day operations.

    That solid financial health bodes well for investors like the Allianz NFJ Dividend Value Fund (NFJEX), an income fund that also owns large stakes in Intel (INTC) and ConocoPhillips (COP).

    Other holders of Pfizer include John Paulson and George Soros, who increased his position by 627.28% in the most recent reporting period. Recently, Mitch Schlesinger, chief investment officer at FBB Capital, named Pfizer one of the best dividend stocks to play defense in 2011.

    Shareholders of document storage firm Iron Mountain (IRM) were the beneficiaries of one of the largest dividend increases from last week. The company’s 200% increase in its quarterly payout brings the total check to 18.75 cents per share, a 3% yield.

    Iron Mountain is the clear leader in the document storage business, laying claim to more than 120,000 clients across the globe. The company benefits from an extremely sticky customer base that’s filled with prime candidates for cross-selling opportunities that take full advantage of IRM’s offerings. A margin squeeze in recent years has given rise to a push for price increases across the board for the company, a change that’ll be a big top-line shift for Iron Mountain, but likely not make a major impact on any customers’ bottom lines.

    With a record of paying down its relatively large debt load, Iron Mountain looks well prepared to keep up its dividend payouts to shareholders for the foreseeable future. Among those shareholders is money manager Chris Davis, whose funds also own large positions in American Express (AXP) and Costco (COST).

    AT&T (T) has been under increased pressures of late. In the last quarter, it’s been reported that that the cellular giant is losing exclusivity of Apple’s (AAPL) iPhone as early as next quarter, when variant of the device will apparently be compatable with Verizon’s (VZ) network.

    The move is a big deal for AT&T, given the mammoth growth that the iPhone has provided the company in the last several years. At present, a full 20% of the company’s subscribers are iPhone owners, a group that’s provided outsized margins and major subscriber growth.

    To counter the negative effects of lost exclusivity, AT&T has been working hard to tackle subscriber stickiness, a metric that the company was struggling with just a few years ago. The company’s $2 billion spectrum purchase this week is indicative of the investment that the company is making to develop a next-generation network, one that could help curb any ill effects from additional consumer options. AT&T’s wireline and directory businesses continue to be profitable -- if less important -- parts of the business, but the company is doing the right thing by focusing on its mobility business, which currently contributes nearly half of revenues.

    Last week, the company announced a 2.4% dividend increase that brings its total quarterly payouts to 43 cents per share, a hefty 5.9% yield at current levels. That’s benefiting investors like George Soros, whose fund currently owns 1.8 million shares in addition to sizable stakes in SPDR Gold Trust (GLD) and Monsanto (MON).

    Recently, AT&T made Scott's Investments list of 11 high-yield dividend champions with staying power, which gathered the highest-yielding, lowest-payout stocks that have increased their dividends for at least 25 years.

    For the rest of this week’s dividend stocks, check out the Dividend Stocks for the Week portfolio on Stockpickr.

    And if you haven't already done so, join Stockpickr today to create your own dividend portfolio.

    -- Written by Jonas Elmerraji in Baltimore.

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    At the time of publication, author had no positions in stocks mentioned.

    Jonas Elmerraji, based out of Baltimore, is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.